TDS on Cash Withdrawals exceeding INR 1 Crore

The Union Budget 2019 (July 2019) has inserted a new Section 194N in theIncome Tax Act, 1961 (‘Act’) in terms of which Bank is required to deduct taxat source at applicable rate when any person withdraws aggregate cash fromone or more accounts in excess of INR 1 crore during any financial year. Thethreshold limit of INR 1 crore is applicable on the aggregate amount withdrawnfrom all types of accounts maintained by a person with the Bank. This Sectionis effective from 1st September, 2019. The provisions of Section 194N of the Act are not applicable on cashwithdrawals by the following categories of persons: a. The Government; b. Any banking company or co-operative society engaged in carrying onthe business of banking or a post office; c. Any business correspondent of a banking company or co-operativesociety engaged in carrying on the business of banking, in accordancewith the guidelines issued in this regard by the Reserve Bank of India underthe Reserve Bank of India Act, 1934; d. Any white label automated teller machine operator of a bankingcompany or co-operative society engaged in carrying on the business ofbanking, in accordance with the authorization issued by the Reserve Bankof India under the Payment and Settlement Systems Act, 2007; e . Such other person or class of persons, which the Central Governmentmay, by notification in the Official Gazette, specify in consultation with theReserve Bank of India

For the financial year 2019-20, for calculating threshold of Rs.1 crore,withdrawals from 1-Apr-2019 would be considered. However, TDS would beapplicable only on withdrawals on or after 1-Sept-2019.